You Inherited an IRA and the IRS Gives You 10 Years to Empty It. These 3 ETFs Make Every Year Count
The IRS gives most IRA heirs a hard 10-year deadline to drain the account, which turns every withdrawal into a tax and timing trap. How you structure the investments inside that window determines whether you compound your inheritance or quietly…
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You just inherited an IRA, and the SECURE Act clock is ticking. Under the current 10-year rule, most non-spouse beneficiaries have to empty the account by the end of the tenth year after the original owner’s death. That is a real planning problem and a real opportunity. Handled well, this money can grow for most of a decade before you touch it. Handled badly, you either sell at the wrong moment or hand more of it to the IRS than you had to. Three funds can carry the load through every phase of that window: Vanguard S&P 500 ETF (NYSEARCA:VOO) for growth, iShares Core Dividend Growth ETF (NYSEARCA:DGRO) for rising income, and JPMorgan Ultra-Short Income ETF (NYSEARCA:JPST) for the cash you actually need to withdraw.
The 10-Year Squeeze, In Plain English
Your challenge is a barbell. Early years, you want the balance compounding. Late years, you need certainty that the money will be there when you sell. Try to force one fund to do both jobs, and you either leave return on the table or blow up your plan in a bad market. Splitting the account into a growth sleeve, an income sleeve, and a distribution sleeve solves that problem. You draw from the safe bucket while the risk bucket keeps working, and you reset the mix as year 10 approaches.
VOO: The Growth Engine for Years 1 through 6
VOO tracks the S&P 500. It is as close to owning “the U.S. stock market” as a single ticker gets, and it charges almost nothing to do it. The expense ratio is 0.03%, which means roughly $997 of every $1,000 you invest keeps working for you each year. Over the past year, VOO returned 18.29%, over five years 81.5%, and over the last ten years 303.84%. No fund guarantees a repeat of past performance, but for the first stretch of your 10-year window, when you can afford volatility, this is the compounding vehicle to lean on.
DGRO: Rising Income While You Wait
DGRO holds U.S. companies with a track record of raising their dividends, and it charges 0.08% a year. That is $992 of every $1,000 still working for you. The fund pays quarterly, and the payout has been marching higher: $1.316 per share in 2023, $1.385 in 2024, and $1.451 in 2025. Its trailing 12-month distribution sits at $1.478, and total return over the past year came in at 22.45%. Assets under management stand near $39.6 billion, so liquidity is not a concern. DGRO gives you a growing paycheck inside the IRA that you can either reinvest for compounding or, later, harvest to help satisfy withdrawals.
JPST: The Distribution Sleeve for Years 8 through 10
As the deadline gets close, sequence risk becomes the enemy. A 20% market drawdown in year 9 becomes a permanent haircut on money you have to remove. JPST is where that risk goes to die. The fund holds ultra-short investment-grade debt from issuers like AbbVie, Capital One, Bank of Nova Scotia, and Caterpillar Financial, and manages roughly $38.4 billion in assets. It pays every month. Trailing 12-month distributions total $2.13 per share, and the price has moved just 1.95% year to date and 4.08% over the past year. With the 10-year Treasury at 4.67%, short-duration income is finally paying you to be patient.
The Trade-Off, Because There Always Is One
None of this is free of risk. VOO will fall hard in a bear market, and if the drawdown arrives in year 8, you will wish you had shifted more into JPST sooner. DGRO’s dividend growth is real but not linear. Its Q4 2025 payment of $0.447 looks nothing like the Q1 2026 payment of $0.331, so budget on the annual total, not any single quarter. And JPST’s monthly checks have been trending lower with short rates, from the $0.20-plus range in 2024 to the $0.17 range in mid-2026. Use it for cash preservation.
Withdrawals from an inherited traditional IRA are still ordinary income, so talk to a tax professional about the timing. What these three funds give you is a structure. VOO provides growth, DGRO turns part of it into a rising paycheck, and JPST guarantees the money is there on the day you need to take it out. Ten years go fast. Make every one of them count.
Contact [email protected] for any questions or corrections.
Ryne Mauck is an investment writer covering exchange-traded funds, retirement planning, and portfolio strategy. Through his work at 24/7 Wall St. and other investment platforms, including Seeking Alpha, he aims to provide clear, research-driven insights that help investors make more informed decisions while maintaining a long-term approach to investing.
Ryne holds a B.Sc. in Finance and an M.A. in Political Science. He is a formerly registered Municipal Advisor Representative and has passed the Series 50, Series 63, and Series 65 exams. His articles are not intended to be, nor should they be interpreted as, financial advice.
